Peer-to-Peer Payment Apps: What You Need to Know

PayPal, Venmo, Zelle, Cash App and others make it easy to send and receive money. You link your bank account, debit card, or credit card to the app, so you don’t have to swap sensitive account information with the other person in a transaction. Instead, you share details such as a username, an e-mail address, or a phone number. Usually, transfers arrive quickly in the recipient’s app balance, though moving the funds from the app to a bank account fee-free may take a few days.

Risks of peer-to-peer payment apps

But peer-to-peer apps (or “P2P” apps) can also leave you more vulnerable to fraud. They’re an increasingly popular target for scammers who, for instance, trick users into sending money for goods or services that never materialize. Or a crook may pose as someone you know and request funds from you. Unfortunately, you may never get back money lost in such scams because you made the payment yourself. The app companies “take the position that you are not protected,” says Lauren Saunders, associate director of the National Consumer Law Center. But, she says, it’s worth asking the company to reverse the transfer if you’ve been scammed.

However, if a criminal gains access to your P2P account and makes unauthorized transactions, you have legal protections. If the transfer came from your bank account, debit card or a cash balance stored within an app, your liability is no more than $50 if you notify the app or financial institution within two business days of learning about the theft. Your liability could be as much as $500 if you wait up to 60 days or unlimited after 60 days.

But popular peer-to-peer payment apps tend to make their own rules. Venmo and PayPal, for example, promise no liability for unauthorized transfers reported within 60 days. With any P2P platform, you have the right to dispute erroneous charges (say, a single authorized transfer that is mistakenly posted to your account twice).

Credit cards have greater robust protections, capping your liability at $50 for unauthorized charges. But P2P apps typically require a fee of about 3% for a transfer using a credit card. And your card issuer may treat money sent through such apps as a cash advance, which typically comes with an additional fee of 3% to 5% and accrues interest immediately at a high rate. Along with credit card fees, watch for other potential charges, such as a fee for instant transfers from the balance held in the app to your bank account.

Find the right peer-to-peer payment app for you

Fees, limits, speed, and best uses

To help you find the right one for you, here are the details for several major P2P services.

PayPal

Fees: 2.9% plus 30 cents for transfers made in U.S. dollars with a credit or debit card; no fee for transfers from your bank account or PayPal balance.

Dollar limit: Up to $60,000 per transfer (limits are sometimes lower for security reasons); no overall limit for users who have verified their identities.

Speed: One to three business days for funds to transfer from your PayPal balance to your bank account (or pay 1.5% for an instant transfer).

Best for: Large transactions.

Venmo

Fees: 3% for transfers with a credit card; no fee for transfers from your Venmo balance, debit card or bank account.

Dollar limit: $5,000 per transaction and per seven days for account holders who have verified their identities

Speed: One to three business days for funds to transfer from your Venmo balance to your bank account (or pay 1.5% for an instant transfer).

Best for: Easy payments with fun features.

Related: The best smartphone apps for seniors

Zelle

Fees: Typically there is no fee to transfer money from your checking account; you can’t use a credit card.

Dollar limit: Varies by institution and sometimes by account and banking history, but $1,000 to $3,000 per day is typical. If your bank doesn’t participate, the limit is $500 per week.

Speed: Instant.

Best for: Free, instant transfers between checking accounts.

Cash App

Fees: 3% for credit card transfers; no fee for transfers from your Cash App balance, debit card or bank account.

Dollar limit: Send up to $7,500 per month if you have verified your identity.

Speed: One to three business days to transfer funds from your Cash App balance to your bank account (or pay 1.5% for an instant transfer to your debit card).

Best for: Simple payments; users may also be interested in Cash App’s investing platform.

Apple Pay Cash

Fees: No fees for transfers from your Apple Cash account or debit card; you can’t use a credit card to send peer transfers.

Dollar limit: $10,000 per transfer and per seven days.

Speed: One to three business days to transfer money from your Apple Cash balance to your bank account (or pay 1.5% for an instant transfer to your debit card)

Best for: Fans of Apple devices.

Google Pay

Fees: No fee to transfer from your Google Pay balance, debit card or bank account; you can’t use a credit card to send peer transfers

Dollar limit: Send up to $5,000 per seven days if you verify your identity

Speed: Three to five business days to send money to your Google Pay balance or to another user from your bank account (transfers to another user from your Google Pay balance or debit card are typically quick); one to three business days to transfer funds from Google Pay to your bank account; transfers from Google Pay to debit cards are typically instant but incur a 1.5% fee.

Best for: Frequent users of Google’s services and products, especially Android devices

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